Apple supplier Foxconn reports sharp drop in November revenue on COVID outbreak, protests

Foxconn, also known as Hon Hai Precision (OTCPK:HNHPF), said on Monday that November revenue fell sharply as the company continued to deal with COVID-19 outbreaks in the country and worker protests at its plant in Zhengzhou, which produces a significant number of Apple (NASDAQ:AAPL) iPhones.

Foxconn said November revenue was $14.7B, or 551.1B NT, down 29% month-over-month and 11.4% year-over-year.

In a statement, Foxconn said the decline in production was due to production “gradually entering off-peak seasonality and a portion of shipments being impacted by the epidemic in Zhengzhou.”

The company added the month-over-month decline “was roughly in line with the company’s expectations.”

Regarding the COVID-19 epidemic, Foxconn said situation “as been brought under control with November being the most affected period by the epidemic,” as the company has reallocated production to different factories and recruit new employees.

Foxconn added that the company is “gradually” moving towards normal production levels and said the fourth-quarter outlook would be “roughly in line with market consensus.”

Separately on Monday, Reuters reported that full production at the Zhengzhou plant may not occur until later this month or early January, citing a source at Foxconn.

Last week, it was reported that the manufacturing plant for Foxconn in Zhengzhou, China, will continue to operate under a closed-loop system, despite the wider city removing COVID-19 restrictions.

Zhengzhou is widely believed to be Foxconn’s largest iPhone assembly plant and the manufacturing giant has offered bonuses of 1,000 yuan, or $141.11, to employees who refer people who get hired to help boost employment numbers at the plant.

Apple (AAPL) previously warned that COVID-19 restrictions in the world’s most populated country would result in lower iPhone 14 shipments than previously expected.

Cupertino, California-based Apple (AAPL) is looking to continue moving its supply chain out of Asia amid COVID-19 related issues as well as rising geopolitical tensions between China and the U.S., but that is something that will not come overnight, analysts said.

“The shift out of China will not be easy and come with clear logistical, engineering, and infrastructure hurdles as the aggressive move to India and Vietnam now begins with the Apple ecosystem alerted,” Wedbush Securities analyst Dan Ives wrote in a recent research report.

A highly watched analyst said last week that Apple’s (AAPL) iPhone 14 Pro shipments could be up to 20M units less than expected as the tech giant deals with supply chain risks out of China.